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Gen Z Back Passive Funds For Long-Term Growth

By Anna Peel. Originally published at ValueWalk.

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  • Young adult investors have mostly been buying passive funds in the first month of the new tax year
  • The US is the favoured market despite volatility, alongside broad-based global equity funds
  • The only two actively managed funds have a growth-bias

Q1 2022 hedge fund letters, conferences and more

Gen Z Back Passive Funds

Emma Wall, Head of Investment Analysis & Research at Hargreaves Lansdown:

“It is great to see young adult investors taking advantage of their tax wrappers so early in the new tax year. It has been a difficult start to the 2022/23 tax year, with significant market volatility caused by geo-political uncertainty and rising inflation – and corresponding central bank policy. Yet if you are investing for the long-term, as those in the cohort are, particularly in a LISA or SIPP wrapper, then it is the right thing to do to look through the headwinds to multi-decade growth opportunities. With a potential investment horizon of half a century in the case of a personal pension, inflation’s impacts – however painful in the present – are transitory and a broad-based competitively priced passive fund can be an excellent option. A global equity tracker will offer geographical diversification with a bias the economic giants of the globe. If you are looking to add to this allocation in the future consider upping your exposure to emerging markets. With a 20, 30, 40 year time horizon most investors can afford to take on more risk for the potential reward.”

Top investments by net buy (£) for those aged 18-29 in the period 5-28 April

Stocks & Shares ISA

Fidelity Index World
Fundsmith Equity
Legal & General International Index Trust
Legal & General US Index
Rolls Royce Holdings Plc

LISA

Fidelity Index World
Fundsmith Equity
Legal & General International Index Trust
Legal & General US Index
UBS S&P 500 Index

SIPP

Bank Of Ireland
Fidelity Index World
Legal & General International Index Trust
Scottish Mortgage Investment Trust plc Ordinary Shares 5p
Vanguard LifeStrategy 100% Equity

About Hargreaves Lansdown

Almost 1.7 million clients trust us with £141.2 billion (as at 31 December 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

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